Members of the committee, guests. Thank you for inviting me to appear today to contribute to your study on the readiness of the Canadian Forces.

I am joined by my colleague David Macdonald, an economist and contributor to the Rideau Institute, who wrote our recent report, released last fall, The Cost of 9/11.

The Rideau Institute is a non-profit, non-partisan research, advocacy and consulting group founded in 2006. It specializes in international affairs, and is funded by more than 2000 individual supporters, by commissioned research, and through our social enterprise which provides consulting services to leading Canadian non-profit groups and trade unions. We do not receive government funding, and our supporters do not receive tax deductions for their donations.

I would like to acknowledge the research contribution of David Macdonald, Bill Robinson, Josh Libben and Kathleen Aiken to our presentation today.

Your report is timely. More than a decade after 9/11, which was followed by such tremendous changes, growth, and heavy combat by the armed forces, the tide is shifting.

In answer to the question you are considering, Are they ready?, one might answer: yes they are, or no they’re not. But I think the answer to the question is a question, which is: “Ready for what?”

Readiness is a measure against a need. What threats are there to Canada? And what are the priorities for our foreign policy, to which National Defence is one contributor?

As you know, the United States has just announced a new direction for its armed forces, born out of three factors, according to the NYT: troubled government finances, winding down of wars in Iraq and Afghanistan, and a changing geopolitical environment.

Such a review is needed in Canada, since we have our own financial challenges to address, our Afghanistan combat mission has ended, and Osama bin Laden is dead.

As David Macdonald pointed out in The Cost of 9/11, in the last decade military spending has increased dramatically. Military spending has nearly doubled (90%) in ten years, 48% adjusted for inflation. When you include other departments, Canada has devoted an additional $92 billion to national security spending, $69 billion in adjusted dollars.

(See chart 1) National Defence spending has never been higher. Spending is more than $21 billion: 6th highest in real dollars in NATO, and in the top 15 globally. Despite a small decline last year, National Defence is predicting further increases – in accordance with the Canada First Defence Strategy.

(See chart 2) Looking at defence spending since the end of the Second World War, when adjusted for inflation our spending has never been higher – exceeding even the height of the Cold War when we faced off against thousands of Soviet nuclear weapons and long-range bombers. Can we say we face a greater threat than that today? And if not, should we continue spending the way we do?

The fact is, we are overspending on defence right now, and we lack a clear sense of how to determine when enough is enough.

(See chart 3) National Defence now accounts for 7.9% of total government spending. However, when you consider only federal department spending, as well as Crown corporations, defence consumes one out of every four available dollars.

As Lieutenant–General Andrew Leslie pointed out in his CF Transformation report, there is substantial room to find savings within the Department of National Defence. Every area of the government has been asked to contribute to helping our federal finances in time of need.

I have heard from many people in the last few days, more than 400 in fact, who have sent ideas for this presentation, and they are worried that their pensions are at risk, or that social programs may erode. They support a military capable of defending our sovereignty, and contributing to UN peacekeeping operations, but not at the expense of caring for people at home. Since we are overspending on defence, we can better protect our social programs through National Defence spending reductions, while still making an international contribution.

(See chart 4) Media reports have indicated that National Defence may be asked for reductions in excess of the 5% or 10% requested by the government. This is reasonable, because our examination of defence and government spending over the last decade shows that while government spending has increased by 40%, defence spending has increased by 60%. That is, defence spending has grown one and a half (1.5) times faster than government spending over the last ten years. In one year alone, the defence budget grew by more than 12%.

It’s clear that the commitments made in the Canada First Defence Strategy must be reviewed. Our allies are going through the same process – many questioning stealth aircraft programs like the F-35 – and Canada should do the same.

As Professor Walter Dorn says, there are hawks and there are doves – but what we need are more owls. We need to spend more wisely.

British Prime Minister David Cameron shared a bit of this wisdom in his speech to Parliament last year. He asked you to look at Afghanistan, and said, “If we’d put a fraction of our current military spending on Afghanistan into helping Afghanistan develop 15 or 20 years ago, just think what we might have been able to avoid over the last decade.”

We can get into a debate about whether the financial burden borne by Canadians over the last ten years was warranted. But I think we should be asking ourselves: Do we want to continue spending at this high level? And more importantly, what are our needs? Can we take action so that we are ready to meet our legitimate security needs, and contribute on the international stage in a manner that Canadians want and support?

As Lieutenant–General Andrew Leslie pointed out in his report, If we are serious about the future – and we must be– the impact of re-allocating thousands of people and billions of dollars from what they are doing now to what we want them to do, to position us for tomorrow, will require some dramatic changes.

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